Month: April 2017

As an IFA I have often discussed with my clients the possible financial returns and also the responsibilities of considering investing in the ‘Buy to Let’ property market as opposed to Unit linked investments such as ISA’s or a Pension. Recently, the Chancellor has decided to financially hit ‘Buy to Let’ investors quite hard which may tip the balance against this option, encouraging many to invest in other areas. Thus, from April anyone buying a property for investment will be required to pay a ‘special ‘ stamp duty of 3% with a starting rate of zero and this will be in addition to the residential tax duty rates which apply for properties above £125,000. Also, from April 2017 Mortgage Interest Relief is also being overhauled. The changes are being phased in, but by 2020 all mortgage interest on ‘Buy to Let’ mortgages will no lon...

Maximising state pension benefits. A key part of financial planning often overlooked is making sure that you receive the maximum state pension in retirement. To get a state pension forecast simply use the tool on the website https://www.gov.uk/check-state-pension. If there is a shortfall, there are 2 options: –          If there are likely to be tax years in the future where the client will not achieve a qualifying year because of insufficient earnings or Credits, then in those years, it is possible to pay Voluntary or Class 3 NICs. –          If there are historic gaps in a client’s NI record, it may be possible to pay Voluntary or Class 3 NICs as a one-off lump sum to make up any shortfall. A key question however is are Class 3 NICs Good “Value for Money”? The ...

Pension Freedoms. There is an old adage that “Just because you can, doesn’t mean you should” however, according to the Association of British Insurers,  over £3 billion has been paid out in lump- sum cash payments from British pensions. If you choose to access your pension- pot ‘as a lump sum’ then 25% of it is paid tax free which means the remaining 75% you will be paying tax at your standard marginal income tax rate. It is important to remember that, if you are still earning, then any extra pension monies you take out will be included in your total tax liabilities before working out your tax levels. In most cases to lose 20% of your pension fund or, in some cases 40%, in order to have the ‘cash in the bank’ is ill- advised, especially when pensions themselves are efficient tax- saving wrappers. This argument is enforced by the l...